Record to report / R2R – Reconciliations


Did you get the list of stupid interview questions?

We shared a simple mechanism of doing the reconciliations without falling into the loop of debits and credits.

Today, coming back to the bank reconciliations let us understand some key points of differences that arise between transactions recorded by our client’s / principal’s accounting department and the bank.

Fundamentally, these will fall into three categories:

  • Timing differences – including lost instruments
  • Interest and charges – as recorded by both the entities
  • Incorrectly given debits and credits – effected in someone else’s account

So what would these items be?

  • Checks/cheques presented, but not cleared
  • Checks/cheques issues but not presented
  • Standing instructions charged but not recorded
  • Direct remittances received but not informed
  • Bank interest and charges debited by the bank, but not informed
  • Interest credits received but not informed to accounting
  • Amounts credited by bank to some other customer’s account
  • Charges of other accounts debited to your client’s account

There could be more reasons, as you break up these. An understanding of the business dynamics will really help.

I will elaborate these a little more in the next post.


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